John Ho is CEO and Co-founder of IWS Equity. With more than 30 years of real estate banking and capital markets experience in both Canada and the U.S., he also serves as President and CEO of Institutional Mortgage Capital (IMC). John co-founded IWS Equity in 2019 with Paul Aiello, the firm’s President.
Ken McKinnon is Senior Managing Director of IWS Equity and serves as Senior Managing Director of IMC. He is responsible for managing relationships, capital raising and fund management activities for both IWS and IMC. Ken has more than 20 years of real estate experience.
Why are you optimistic about the Canadian real estate market?
John: There is a lot to be optimistic about and tons of opportunity for innovative capital providers to drive long-term value for investors in the current market. Canada has emerged as a population-growth leader among developed countries driven by immigration. With immigration trends exceeding high-scenario projections in recent years, Canada’s population just crossed the 40-million mark earlier than expected and could be almost twice that by 2068. These growth projections far exceed projected growth trends for all other G7 countries. Ultimately, Canada is going to need more real estate across all sectors to meet growing demand.
Ken: There’s another fundamental reason for optimism about Canadian real estate: there are unique fundamentals of our real estate market that help foster stability and sustainable growth. Canada’s strenuous credit requirements, more predictable legal system and concentrated financial services sector discourage speculation and promote market stability. Canada sees fewer defaults and loan losses as a result. Supply is impacted by these distinct Canadian market characteristics, which include more onerous zoning regulations and environmental protections. We see these issues in the supply numbers relative to other G7 countries. For example, Canada has the lowest number of housing units per 1,000 people among G7 nations, according to TD Economics. With the backdrop of strong market fundamentals, there is significant opportunity currently for outsized investment returns across most asset classes due to this imbalance.
Which real estate asset classes do you believe hold the greatest long-term potential?
John: We believe population growth will further exacerbate undersupply issues in certain key asset classes, with the obvious being residential development. You can’t double a country’s population without a lot more housing and a lot more grocery-anchored retail and industrial properties. Residential sub-sectors will amplify, and you will see lots of innovation driving attractive long-term investment returns in niche speciality sectors. For example, one area very familiar to us is manufactured home communities. We’ve been capital providers in this speciality sector for many years and understand the nuances of this asset class. I think we’ll see this asset class grow exponentially to meet growing demand, both for recreational properties and as an innovative alternative to primary residences. The proliferation of online shopping and changing consumer habits will also drive changing real estate needs in industrial areas. The potential is significant for many of these asset classes — it’s important to look beyond existing market uncertainty and maintain a forward-looking perspective.
Execution is key for firms like yours. What makes IWS Equity successful?
John: We do what we say we’re going to do, and we expect the same of everyone we work with. Our co-investment partners know they can rely on us because our team has been a reliable source of capital in the market for over 30 years. We’ve earned our partners’ trust. Similarly, our fund investors know we have industry leading experience structuring investment portfolios with varying risk/return characteristics. We’re not afraid to walk away from a deal that is not a fit and we’re selective about which opportunities we pursue, always with a diversification lens. Ken: A lot of asset managers chase deals. Not us. We are a sought-after co-investment partner because we know how to execute, lead through short-term market disruptions and add value through active management. We have years of experience identifying real estate market opportunities and capitalizing through our agile platform.
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Coming soon: John Ho and Ken McKinnon on selecting real estate investments and sticking with trusted partners